Moody's: Land O'Lakes acquisition is negative

Moody's Investors Service said it believes that Land O'Lakes' debt-financed acquisition of Kozy Shack, which will bring Land O'Lakes' pro forma leverage to approximately 4x, is credit negative in context of the cooperative's broader credit metrics.

Land O'Lakes' Baa2 senior secured debt rating reflects the cooperative's strong brands that hold leading market position in their respective categories and its high market shares in crop inputs, shell and specialty eggs and animal feed.

The rating also takes into consideration the significant improvements that Land O' Lakes has made to its business over the past several years through the sale of its swine, liquid eggs and other low-margin businesses and through other ongoing operational restructurings, Moody's said.

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